The conference hall at Mining Disrupt Miami, held July 23–25, 2019, was filled with the low hum of industry veterans debating the future of the network. On stage, David Vorick presented a starkly simple argument about power, liability, and the structure of Bitcoin mining. Vorick, the founder of Obelisk, an ASIC manufacturing company, stood before the audience with the calm demeanor of an engineer who has already solved the problem in his head. He was not there to discuss chip yields or hash rates in isolation; he was making a structural critique of how mining farms interact with the broader blockchain. The session ran just under eight minutes, a brevity that belied the weight of the argument he was making regarding who holds decision-making power in the consensus mechanism.
Vorick opened by addressing the centralization of mining power. He argued that the current structure, dominated by a handful of large mining pools, creates a significant vulnerability for the network's decentralization. In the standard model, individual mining farms do not communicate directly with the Bitcoin network to select blocks. Instead, they delegate this responsibility to a pool operator. This delegation, Vorick contended, transforms the mining farm from an independent validator into a dependent client, exposing the hardware to risks that the farm owner did not choose. He viewed this dependency as a critical weak point in the ecosystem's design.
mining pools is a big weak point for decentralization on the network
David Vorick · 1:49
The core issue, as Vorick framed it, was the Stratum protocol. This is the standard communication protocol used by most mining hardware today. Stratum explicitly grants the mining pool the authority to decide which block is being mined. For a mining farm, this means their hardware is working on a block chosen by a third party. If that third party makes a decision that the rest of the network views as malicious or harmful, the mining farm is implicated by association. Vorick argued that this dynamic places an unfair liability on the hardware owner, who is often technically innocent but is viewed by the network as complicit in the pool's actions.
The 2013 Precedent: GHash.io and Pool Trust
To illustrate the real-world dangers of this delegation model, Vorick pointed to historical precedent. Speaking from memory, he recalled a case from 2013 in which a large pool ran block-discarding attacks against a Bitcoin dice gambling site, using its hash rate to tilt the odds in its own favor. In the recording he names the pool in passing; the incident he describes matches GHash.io, the pool he returns to a moment later. The case showed how a pool's control over block selection could be turned into a weapon for its own gain.
we do know that occasionally pools will cross the line and act maliciously
David Vorick · 2:36
The community's response was reactive. Once the abuse came to light, miners pointed their hardware at other pools, and the offending pool's share of the global hash rate collapsed to a small fraction of what it had been. Vorick noted that this outcome, while it stopped the abuse, was not a proactive solution. It required the network to react to a crisis after it had already happened. The punishment landed on the pool, but the underlying structural flaw remained: the protocol let the pool make those decisions in the first place.
The Hard Fork Dilemma: When Innocent Miners Get Punished
Vorick argued that the reactive strategy of moving miners away from bad pools is insufficient, particularly in a fragmented market where a single dominant pool might control a significant portion of the hash rate. If a pool is acting maliciously, and there are no viable alternatives for miners to switch to, the network is left without a clear path forward. In such scenarios, developers might resort to more extreme measures, such as a hard fork that changes the proof-of-work algorithm. This is a heavy-handed solution that affects the entire network, but Vorick warned that it often punishes the wrong parties.
it's the mining farm owners who are you know technically innocent or you know at best complicit
David Vorick · 4:27
The danger of a hard fork, Vorick explained, is that it punishes the hardware owners. If a mining pool is the source of the malicious behavior, but the mining farms are using the standard Stratum protocol, they are technically following the rules of the protocol. However, if the network forks to change the algorithm, the mining farms are left with hardware that may no longer be compatible or efficient. They have not done anything wrong in terms of their intent, but they bear the financial cost of the network's security response. Vorick argued that this creates a perverse incentive where mining farms are at the mercy of the decisions made by pool operators and developers, rather than having agency over their own operations.
Beyond Variance: Redefining the Purpose of Mining Pools
At the heart of Vorick's argument was a redefinition of what a mining pool is supposed to do. He contended that the primary purpose of a mining pool is not to select blocks, but to reduce income variance for mining farms. A single mining farm might only find a block every few days or even weeks. This sporadic income is difficult to manage for a business that needs to pay rent and electricity bills on a regular basis. Mining pools solve this problem by aggregating the hash rate of many farms and distributing rewards based on contribution, providing a steady, predictable income stream.
the core purpose of mining pools is not to pick blocks
David Vorick · 5:12
However, Vorick argued that the current Stratum protocol conflates two distinct functions: income smoothing and block selection. By giving the pool the power to pick blocks, the protocol introduces a layer of risk that is unnecessary for the income smoothing function. Miners need the financial stability that pools provide, but they do not need the pools to make consensus decisions on their behalf. This distinction was crucial to Vorick's proposal. He believed that the industry should separate these two functions, allowing pools to focus on what they do well (financial management) while returning the consensus power to the hardware itself.
The Better Hash Solution: Returning Power to the Hardware
To address this structural flaw, Vorick highlighted a protocol called Better Hash, developed by Mech Frollo, a Bitcoin Core developer. Better Hash was designed to replace Stratum with a model where the mining farm, not the pool, decides which block to mine. The pool still handles the financial aspects, aggregating shares and paying out miners, but it does not dictate the block selection. This shift would mean that mining farms are directly responsible for the blocks they mine, aligning their incentives with the health of the network.
this is really cleaned up protocol that also allows the miners and the mining farms to pick The Block
David Vorick · 6:49
Vorick noted that while there were efforts to update Stratum, such as Stratum 2, these updates still retained the critical weakness of allowing the pool to decide what blocks are mined. Better Hash, he argued, was a cleaner solution from an engineering perspective. It made sense for the mining farm, as it reduced liability. It made sense for the mining pool, as it clarified their role. And it made sense for the network, as it removed a central point of failure. At the time of the conference, Bitcoin was trading around $9,770, a price point that contrasted sharply with the $83,573 recorded in more recent market data, illustrating the volatile backdrop against which these structural debates have played out over the last decade.